Supreme Court justices divided sharply Wednesday as they heard a third challenge to Obamacare, grappling with the law’s poorly drafted language and trying to decide how broadly Congress intended for the government to pay subsidies to help Americans buy insurance.
The court’s more liberal justices offered vocal support for the Obama administration’s holistic reading of the Affordable Care Act, saying they believed Congress intended for customers in all of the exchanges to be eligible for tax credits even if their states relied on the federal HealthCare.gov exchange instead.
But a pair of conservative justices said the law — which says subsidies can be paid to customers only on exchanges “established by the state” — is clear.
“I mean, it may not be the statute they intended,” said Justice Antonin Scalia, a member of the court’s conservative bloc. “The question is whether it’s the statute that they wrote.”
Chief Justice John G. Roberts Jr., who saved Obamacare in 2012, rarely spoke up during the session, while Justice Anthony M. Kennedy, the court’s most frequent swing vote, expressed serious concerns about both sides’ arguments.
The justices are slated to decide the case, known as King v. Burwell, by June, and it seems certain that the administration will have to win the support of either Justice Kennedy or Chief Justice Roberts to prevail.
For months, the issue has divided Obamacare’s supporters and detractors. Congressional Republicans see the lawsuit as their gateway to repealing and replacing President Obama’s reforms, while Democrats have forecast widespread woe in the 34 states that could lose their subsidies because of the case.
Justice Scalia said Democratic majorities passed the 2010 legislation hastily, so it is “not the most elegantly drafted statute.” He said it’s usually up to Congress to draft legislation that fixes these sorts of problems.
“Well, this Congress, your honor?” Solicitor General Donald Verrilli Jr. shot back, hinting at the gridlock that has prevented Mr. Obama and Republicans on Capitol Hill from finding much agreement.
If the court does rule against the administration, it would blow a hole in Obamacare. Without the subsidies, an estimated 6 million Americans in more than 30 states will be unable to afford coverage, sending the law’s economics into a tailspin.
The challengers argue that Congress intended to use the offer of tax credits to entice states to set up their own exchanges. When most refused, the IRS reinterpreted the law in 2012 to decide that all customers could be eligible.
“The only provision in the act which either authorizes or limits subsidies says, in plain English, that the subsidies are only available through an exchange established by the state,” Michael A. Carvin, an attorney for the challengers, told the justices.
Justice Kennedy said that made it sound like the government gave the states a ridiculous choice of either setting up an exchange or letting their insurance markets descend into a “death spiral” of skyrocketing premiums, as states adapt to the law’s coverage standards without the help of subsidies.
“It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there’s a serious constitutional problem if we adopt your argument,” he said.
Justice Elena Kagan said that if Congress meant for the subsidies to be enticements lawmakers would have made that clearer.
Justice Kennedy also questioned the Obama administration’s claim that it could reinterpret the law on its own rather than seek a fix from Congress.
“It seems to me a drastic step for us to say that the Department of Internal Revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here?” he said.
Chief Justice Roberts, who was the key vote in the 5-4 ruling upholding Obamacare’s individual mandate in 2012, took little part in the substantive questioning but at one point wondered whether a future president could have the IRS change the interpretation of the law.
Architects of the legal theory behind the case said they thought neither justice would let the IRS trump the strict wording of the law.
“I think [Justice Kennedy] and the chief justice showed keen skepticism to the idea that something of this magnitude would be left to the IRS rather than the statutory text,” said Jonathan Adler, a law professor at Case Western Reserve University.
Outside the courtroom, protesters rallied in the rain, chanting slogans and holding up signs reading, “Don’t take my care,” or “Keep the IRS out of our health care.”
The case reached the Supreme Court after two lower appeals courts split.
Justice Samuel A. Alito Jr., who embraced many of the challengers’ arguments, suggested that if the court ruled against the administration it could delay the fallout from a ruling until the end of the year.
That could give congressional Republicans more time to come up with an alternative to keep Americans from losing insurance even as they try to eat away at Obamacare.
House Minority Leader Nancy Pelosi, California Democrat, accused Republicans of trying inflict pain on Americans who have benefited from her party’ historic reforms.
“With this case,” she said, “Republicans intend to take affordable health coverage away from millions of hardworking Americans — hoping to achieve through the courts what they cannot do even with majorities in both houses of Congress.”
⦁ Christopher White contributed to this report.